The Prosperity Paradox [Clayton Christensen] P81

Post Length: 3 min

In Review: The Prosperity Paradox

Author: Clayton Christensen

Length: 9 hrs 37 min

Reco: must [5/5 bananas]

I can’t believe you haven’t given knowing the situation the organization is in. The executive director challenged me in front of the newly found board.

John, it is not a prerequisite to hold a board seat for a member to donate to the organization. I won’t be giving any money until there is full transparency on where it is going. I already told you to cut costs and you refuse to do so.

Not only did you not give, but you gave to another organization, I don’t think you have faith. Now the rest of the board was lamenting with him.

Let me be clear here, after 16 years of following Christ, you are the first person who has challenged my faith based on where I donated my money, and you don’t have that power over me. You have a long road ahead of you to sort this out, but I won’t be joining you for the ride. You can accept this as my informal resignation from the board.

As I walked out, he continued … This isn’t your moment Ando, you aren’t a martyr.

Right then I knew I needed to do something more for the nonprofit sector, but I still wasn’t clear on how to do it. Meeting Dr. Kajal was a good starting point. During our dinner I mentioned The Innovators Dilemma knowing she is close friends with Clayton from Harvard. She told me to read The Prosperity Paradox. I had never heard of it, but downloaded it right after I left the restaurant.

In The Prosperity Paradox, using a few key case studies, he takes us through the process of creating economy. In doing so, we have a far better shot at ending the poverty crisis.

Not all innovations are created equal. - Clayton

I struggled with this looking at new ventures. I know it will generate revenue, but what part of the market is it attached to? To run these ideas through a filter, Clayton breaks them into three types of Innovation …

  1. Sustaining Innovation - ensuring longevity of existing market

  2. Efficiency Innovation - ease of use or access to existing market

  3. Market Creating Innovation - reaching non consumers

Once you decide your type of innovative idea, you can focus on five areas of enablement to make sure it succeeds.

  1. Non consumption - people who aren’t currently consumers

  2. Enabling technology - Inputs of lower value to create outputs of higher value

  3. New value network - each touchpoint in the process in the value network adds to the cost. Creating a new market enables you to control the cost structure better.

  4. Emergent strategy - It’s not a fixed strategy because it’s an unproven market so you have to be flexible.

  5. Executive support - because it is an unproven market and generally requires more resources than sustaining market innovation.

By knowing your type of innovation and enablers, you can build the right infrastructure to support it. Instead of just sending money, you can build business to create economy. Not all ideas have to be a market creating innovation, you just need innovation.

Infrastructure does not create value, it simply stores it and distributes it. - Clayton

Most of Charity has left everyone wanting. Donor’s wanting more transparency and connection to their money, and recipients wanting more donations. There has to be a better solution.

After a meeting with Thomas, my buddy who runs Many Hopes, he supports the idea of a summit for founders of non-profits to learn better business practices.

In the past, these types of events don’t work out well … because it is all founders having the same problems. This would be with executives of for profit businesses to break down their toughest challenges with messaging, branding and marketing, and give solid guidance on where to improve.

Over the next few weeks, I will finalize the date of the event. I am leaning towards October.

I don’t ever want anyones faith to be challenged because of where they give their money. I also want the 50% of Americans who distrust charities to help me find a solution to better giving. Ultimately, I know that it comes down to the founders. If they will embrace transparency and the 100% giving model, it will be much easier to unlock giving by so many people who have never experienced its magic.

Love, Ando